Ben Black | Verlinvest

Black, a principal at the investment firm backed by AB InBev’s families, reveals a consumer-centric view on the market and questions the hype around foodtech

By Murielle Gonzalez

Ben Black

Ben Black tells me that Verlinvest looks at food and drink brands through the lens of the consumer. “Consumers are looking for more genuine interactions with brands to build trust at a personal level,” he says, revealing the investment approach of the family-owned private equity firm. I’m not surprised by the statement, however. The company, an evergreen fund, is the investment vehicle of Belgian families who together have built one of the world’s largest consumer businesses – the brewery group AB InBev. Today, and after 25 years in the market, Verlinvest amasses a portfolio of challenger brands worth €1.6 billion, featuring iconic names such as Oatly and Vita Coco. I’m determined to find out more about the consumer-centric mindset of the company, and in this interview, Black reveals his views on the market and the hype around foodtech.

Black joined Verlinvest in 2016, after a nearly five-year tenure at the boutique investment bank Hawkpoint Partners where he specialised in M&A, IPOs and refinancing for food and drink businesses. Joining Verlinvest allowed him to channel his financial experience through high-level strategic advice.

“We invest up to €150 million of equity, and take minority and majority positions with no time horizon on our money,” says Black. “We want to put entrepreneurs at the centre of our capital.”

On paper, the investment philosophy of Verlinvest consists of accelerating entrepreneurs “to drive consumer revolutions” – but what does it mean? Black explains: “We provide the infrastructure of support for entrepreneurs to build fast-growth brands internationally with people on the ground, hands-on, in each of the main geographies.” This support, says Black, is in the shape of recruitment, connections with the retailer and the media, and the overall operational mindset.

“We provide the infrastructure of support for entrepreneurs to build fast-growth brands internationally”

Black explains Verlinvest’s methodology by recalling the progress of some of the brands in its portfolio. “Vita Coco in 2007 launched the business in the UK and China. In 2016, Oatly was in Sweden and then launched in the US, UK, China, Germany, and the Netherlands. Tony’s Chocolonely, a Dutch business, is in the process of launching in the US, the UK and soon Germany.”

He says the international expansion of these brands was possible partly due to the coordinated effort of Verlinvest’s international network in those countries. “We helped build the team through recruiters, defining skill sets, brands strategy and messaging to local markets. Also through retailer partnerships to get listings and tailoring their pitch to retailer needs.”

Black names James Bailey, executive director at Waitrose, and Grégoire Kaufman, ex-head of private label at Carrefour, among Verlinvest’s operating partners that bring the experience and know-how to the table.

Besides food and drink, Verlinvest invests in health and care, and employs a global team working from offices in New York, London, Brussels and Singapore.

Market overview

Black believes the changing landscape of the food and drink space is what keeps it refreshing and interesting – and he recognises that food companies have gone through the biggest shift in the market.

“Food companies have been driving costs down, becoming a lean operation to some extent at the expense of innovation and the brand,” he says. “We now see a return to growth as a focus, moving innovation up the agenda, building consumer connections and investing in disruptive brands.”

He argues that corporate venture capital has energised the market with resource allocation towards growth and innovation. “That’s fantastic because it shows we’re all supporting the ecosystem that ultimately supports consumers,” he explains. “I’m a big believer that the rising tide raises all ships.”

Verlinvest: A consumer focus

The Covid-19 pandemic has given direct-to-consumer marketing a push, but for Black, it has become much more important to build trust with consumers. “Today, the tone of voice is much more colloquial, and products have become much more personalised and fragmented as a way of getting closer to the consumer needs,” he explains.

Black notes the consumer has much higher expectations of brands now. “They want to know their opinion on issues other than their product,” he says, noting that digital and social media is catalysing the trend.

The increasing interest in nutrition and wellness during the past seven years is yet another striking change in the food and drink landscape. For Black, this growing interest in holistic health has paved the way for consumers to appreciate food and drink products not only from its nutritional profile, but the provenance of ingredients and the supply chain. “Consumers were more interested in the ‘brand promise’, but now it’s more about the functionality – what it does to me, and the environment,” he explains.

Lean operations, consumer connection and holistic wellbeing are precisely the elements that Verlinvest seeks in the companies it invests – and where the advantages of challenger brands lie.

“Challenger brands come to market with a lack of legacy, so they start their relationship with consumers with a clean slate,” says Black. “Their job is to aggressively create consumer connections – that’s a natural advantage.”

Black also argues that challenger brands are nimble and digital by default. “Brands today choose either a direct-to-consumer business model from the beginning or become an omnichannel brand. Whatever the case, they have digital communication at its core, which allows them to move faster,” he says. Black warns, however, that building trust is a complex process. “Brands must find what’s their differentiation, and that’s not easy to do in food given the amount of innovation and capital available.”

To the point

Portrait photo of Ben Black
Ben Black

What do you look for in a company to invest in?

New investments are defined by the possibility of disruptive growth. We’re looking for brands that can define categories and can radically improve consumer experiences, solving a fundamental consumer need. We want to see a distinction, differentiation and purpose, and a business that can do this in big markets internationally.

We also want to see some proof of traction, so brands will always have revenues. But our focus is less on the amount of money we put in, and more on the size of the opportunity.

How do you measure the market opportunity?

Just look at the categories that have a big market and a problem to be solved. Sustainability, for example – Oatly does it in the dairy category, and Tony’s Chocolonely does it by tackling child labour. Then you look at how much it resonates with consumers – do people really care about it or is something nice to have?

How do you keep track of changing consumer behaviour?

We are close to consumers through direct-to-consumer surveys and different digital tools that we use, such as social listening that allow us to understand the conversations that are happening around specific issues.

We’re also making much better use of online purchasing data to understand what and how people purchase online. We then triangulate these views to get a better picture of the market.

What do you make of the buzz around foodtech?

Technology is important to provide the defensibility you need to accelerate the business. Huge investment goes into food innovation now because of its role in addressing the problems in the ecosystem, but it doesn’t work on its own. Good foodtech needs to be married with good communication, helping consumers understand the role of technology – this combination will drive demand.

Take Oatly, for example. The company has many patents around enzyme technology to create oat milk, but the business came alive when the current chief executive arrived in 2013 and launched the brand to help communicate why the technology was transformational to consumers. Foodtech needs to solve a consumer need – and that depends on the execution.

For me, this is not just about investors capitalising on a growth trend that’s rising, but about backing companies that can drive a change.

How do you see the market developing post-Covid-19?

The pandemic accelerated trends that were already in the market, but not fundamental changes in consumer attitudes. Channel disruption boosted e-commerce and local groceries, the digitalisation of businesses via e-grocery and digital solutions to consumers, and the trends around health and wellness with a holistic view brought energy, sleep, and digestion to the forefront. We’re still very keen on putting money to work behind disruptive brands in these areas, more than ever.

Black says the team at Verlinvest is disciplined because the investment philosophy is thematic in its approach. “Every few years we look at what we consider to be long-term themes versus fads,” he says, noting that five to six themes are chosen to invest in. “Natural hydration as an alternative to carbonated soft drinks; plant-based and sustainability; heritage and provenance; clean nutrition; and better indulgence are the themes we are now focused on,” he concludes.